Concerns Reduce over China Liquidity and FED QE Exit, Major Currencies Still in Range - 25.6.2013

Risk sentiment was slightly improved on Monday evening as FED members calmed concerns about FED asset purchase exit plans. Initially US stocks slumped to new monthly lows but then recovered, however S&P 500 closed in negative territory lower by 1.21% and Dow Jones Industrial Average down by 0.94%. Worries over Chinese liquidity strain drove Asian markets lower today even though they began in positive light, NIKKEI 225 end up lower by 0.72% at 12,969.34. People’s Bank of China decided not to provide extra liquidity in the previous weeks, rates increased and interbank lending market got hurt. Therefore investors feared the risk for insolvency for smaller banks is increasing and that in turn would end up to larger financial institutions.

Concerning currency pairs most of them are still trading in range from yesterday session. The Euro against the greenback rose slightly to resistance at 1.3151 and should the traders are further calmed about FED intentions to unwind QE then we may see it higher, however short-term trend is downward. The US dollar against the Japanese Yen is also still fluctuating between 98.73/97.18 sideways zone as recent trading lacked of economic releases. The US dollar index is mildly softening from recent top at 82.74 limited for the time being by 82.23, while later today is likely to get more volatile on data releases. US Durable Goods Orders are expected to be lower in May compared to previous figures, in addition, later on Case Shiller House Price Index would be in focus and lastly Consumer Confidence.